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TMI Blog2014 (2) TMI 297X X X X Extracts X X X X X X X X Extracts X X X X ..... NVAT Credit Rules, 2004 (CCR, 2004) amounting to Rs.2,00,70,434/- during the period September 2007 to January 2009 and Rs.1,72,90,306/- during the period August 2006 to January 2009. The charge is that M/s. Merck Specialties Limited, Worli, who distributed the credit, did not have any manufacturing unit of their own and the appellants, M/s. Sunbell Alloys Co. of India Ltd. and M/s. Machsons Pvt. Ltd. are only job-workers who undertake repacking/re-labelling of goods imported/procured by M/s. Merck Specialties Ltd. As per the provisions of Rule 2(m) read with Rule 7 of CCR, 2004, the appellants being separate legal entities and not being a unit of Merck Specialties ltd., were not entitled to such availment of CENVAT Credit distributed by a different legal entity and therefore, the credit availed by them on the documents issued by Merck Specialties Ltd. was inadmissible. It is also urged that the input service distributed pertains to services such as car hire charges outward transportation, clearing and forwarding charges, manpower recruitment agency services, maintenance and repair services and Custom house agent's services, event management services. These input services were not u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry where the importer wants to utilize the imported goods in terms of the notification under which the goods were imported and the department cannot insist on ownership of factory and deny registration for the purpose of notification. 3.3 Reliance is also place on the decision of this Tribunal in the case of Colgate Palmolive (India) Ltd. vs Commissioner of Central Excise Mumbai wherein it was held that input service credit is available in respect of goods manufactured by a contract manufacturer on which duty liability is being discharged under Seciton4A on the basis of the MRP declared by the brand-name owner and the cost of the input services are included in such MRP for the purpose of discharge of Excise duty liability. Reliance is also placed on the decision of the hon'ble apex Court in the case of Tata Oil Mills Company Ltd. vs. Collector of Central Excise 1989 (43) ELT 183 (SC) wherein it was held that notification issued should be interpreted keeping in mind the object and purpose of exemption and the nature of actual process of manufacture involved and the notification should be construed in a harmonious way so as to achieve the purpose and object and purpose and not a res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red into between the parties. As per the Toll Manufacturing Agreement entered by M/s Merck Specialties ltd. with the appellants, the agreement contemplated therein is on a principal-to-principal basis and employees of the manufacturing job-worker shall not be deemed to be employees of M/s. Merck Specialties Ltd. and the job-workers shall comply with all the statutory requirements and also the requirement of labour legislation. Merely because the job-workers are paying excise duty on the value declared by M/s Merck Specialties Ltd., that by itself does not lead to the conclusion that the job-workers are not independent entities and not manufacturers in their own right. It is a well settled position in law that job-workers are the manufacturers and not the suppliers of raw materials. 4.1 Reliance is placed on the decision of the Tribunal in the case of Burron International vs. Commissioner of Central Excise & Customs, Vadodara 2003 (161) ELT 540 wherein it was held that job-worker is the manufacturer and not the raw material supplier. Reliance is also placed on the decision of this Tribunal in the case of Panacea Biotec Ltd. vs. Commissioner of Customs, New Delhi 2003 (153) ELT 627 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the said Rules provides for manner of distribution of credit by the input service distributor, which reads as follows: "7. Manner of distribution of credit by input service distributor . - The input service distributor may distribute the CENVAT credit in respect of the service tax paid on the input service to its manufacturing units or units providing output service, subject to the following conditions, namely:- (a) the credit distributed against a document referred to in rule 9 does not exceed the amount of service tax paid thereon; or (b) credit of service tax attributable to service used in a unit exclusively engaged in manufacture of exempted goods or providing of exempted services shall not be distributed." 5.3 Therefore, if anybody wants to avail input service credit, the above provisions of law has to be complied with. As per the definition of 'input service distributor' it has to be a service used by the manufacturer, whether directly or indirectly, in relation to the manufacture of final products and clearance of the final products up to the place or removal. In the present case, the manufacturer is the job-worker ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ise & Customs, Aurangabad vs. Mahyco Seeds Ltd. 2005(182) ELT 163 (Bom), the hon'ble High Court of Bombay held that raw material supplier could not be considered as manufacturer but it is the person who actually undertakes the manufacturing operations who is liable to discharge excise duty liability. Further, in the case of Collector of Central Excise vs. Sonali Enterprises 1991 (56) ELT 164 this Tribunal held that, a manufacturer is one who actually manufactures or fabricates the goods unless he is shown to b e a mere dummy unit or a puppet under the control or supervision of raw material supplier and job-worker cannot be considered as hired labour. 5.6 If one applies the ratio of these decisions to the facts of the present cases, it will then become very clear that it is the appellants who are the manufacturers and not M/s. Merck Specialties Ltd. who has merely supplied the raw materials to be the appellants for the manufacture of the goods. It is also not in dispute that it is the appellants who are discharging the excise duty liability though on the price declared by M/s. Merck Specialties Ltd. The value on which excise duty liability is discharged is not determinative of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eligible for the input service credit distributed by M/s. Merck Specialties Ltd. is not in accordance with the provisions of input service distribution scheme envisaged under CCR, 2004. 5.8 As regards the contention of the appellants that, if input service credit is denied, it would result in cascading effect of taxes and would militate against the broad principles enunciated by the Finance Minister in his budget speech, it is a settled position of law that law has to be interpreted as it is expressly worded. The Finance Minister's speech and the intentions are not relevant for interpreting the law so long as the wording of the law are very clear. In the present case, the input service distributor scheme under CCR, 2004 envisages distribution of input service tax credit by an office of the manufacturer to its own manufacturing units. There is no ambiguity in the wordings of these provisions in the CCR,2004. If that be so, we need not go into the purpose and object of the scheme or the Finance Minister's Speech to ascertain the scope of the provisions. It would also be pertinent to note that input service distribution is a special scheme or a special facility made available subject ..... X X X X Extracts X X X X X X X X Extracts X X X X
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